Memorandum

City of Lawrence

TO:	Mayor and City Commissioners
FROM:	City Manager David L. Corliss
C:	Toni Wheeler, Director of Legal Services
Date:	June 7, 2010
RE:	Acquisition of Former Farmland Facility

At the March 23, 2010 study session, the City Commission discussed the proposed acquisition of the former Farmland facility.  The Commission directed staff to finalize the necessary legal documents for the acquisition and to place the final documents on a future City Commission agenda for approval.  The general terms of the acquisition are as follows:

• The City will acquire the 467 acre site without a purchase price paid by the City.
• The City will receive at closing $8.5 million from the current property owner, the Farmland Industries (FI) Kansas Remediation Trust to be used for remediation.
• The City will execute a Consent Order with Kansas Department of Health and Environment (KDHE).  The Consent Order will place the liability for the necessary environmental remediation of the Farmland site on the City.  If the City successfully executes the remediation as outlined in the Consent Order, the City will not have any further environmental liability for the known site conditions from KDHE for the site.  The City has received a statement from the Environmental Protection Agency (EPA) concerning the limits of the City’s obligations on the Farmland property.  (See Below) 

The following documents are attached:

• KDHE “Permission Letter” approving the City’s acquisition of the site, subject to certain conditions;
• Asset Sale and Acquisition Agreement;
• Amendment to FI Kansas Remediation Trust Agreement permitting the Trust to pay $8.5 million to the City at the closing of the transaction;
• Consent Order with KDHE;
• Environmental Protection Agency (EPA) Letter Concerning City’s Acquisition of Farmland site.

Staff is finalizing the legal descriptions and lease/contract schedules for inclusion as exhibits of the Asset Sale and Acquisition Agreement.  The exhibits will be final prior to the closing on the property.  With the exception of the exhibits related to the legal description and leases/contracts, the documents are in their final form and are ready for City Commission approval, if appropriate.    If authorized to proceed, closing is scheduled to occur between 90 and 120 days after the execution of the Asset Sale and Acquisition Agreement and the Consent Order.   

Transition Remediation Services Agreement

Staff requests authorization to issue a Request for Qualifications (RFQ) for a firm to assist City staff with the preparation and submission of remediation-related plans and reports to KDHE in accordance with the Consent Order during a transition term of a few months.  Payment of the selected firm’s services can be made from the trust funds the City will receive through the Asset Sale and Acquisition Agreement for the Farmland site. 

Requested Action:

(1) Authorize the Mayor to execute the Asset Sale and Acquisition Agreement to acquire the Former Farmland Industries Property;

(2) Authorize the Mayor to execute the Consent Order with the Kansas Department of Health and Environment (KDHE) under which the City agrees to be responsible for the performance of the required remediation of the Farmland site in accordance with the terms of the Consent Order; and  

(3) Authorize the City Manager to issue a Request for Qualifications for environmental remediation services related to the former Farmland site, if appropriate.